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CONCEPTUAL FRAMEWORK AND ACCOUNTING

STANDARDS. Chap 27-30 pdf.pdf
Accountancy (Central Philippine University)

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EARNINGS PER SHARE (Conceptual Framework and Accounting Standards CHAP. 27)
1. EPS disclosures are required for
- Entities whose ordinary shares and potential ordinary shares are publicly traded and
entities that are in the process of issuing ordinary shares in public market
2. EPS disclosures are
- Required for public entities and encouraged for non-public entities
3. When an entity issues both consolidated and separate financial statements, the EPS
information is required
- Only for consolidated financial statements
4. Earnings per share shall be computed on the basis of
- Average ordinary shares outstanding during the year
5. Earnings per share shall be reported for all of the following, except
- Gross income
6. An ordinary share
- Is an equity instrument that is subordinate to all other classes of equity instrument
7. In computing basic earnings per share, if the preference shares are cumulative, the amount
that should be deducted as an adjustment to the numerator is the
- Annual preference dividend
8. In computing basic earnings per share, the amount of preference dividends on
noncumulative preference shares should be
- Deducted from net income only when declared
9. In computing basic earnings per share, the full amount of the required preference dividends
on cumulative preference shares for the period should be
- Deducted from net income whether declared or not
10. In computing basic loss per share, the annual preference dividend on cumulative
preference shares should be
- Added to the net loss whether declared or not
11. Where in the financial statements should basic and diluted EPS be reported?
- In the income statement
12. An entity that reports a discontinued operation shall present basic and diluted earnings per
share for the discontinued operation
- Either on the face of the income statement or in the notes to financial statements
13. Earnings per share should be computed on the basis of
- Voting ordinary shares

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14. Undeclared preference dividends are deducted from net income in the EPS computation
for which preference shares?
- Cumulative
15. Earnings per share should always be reported for
- Income from continuing operations
INTERIM FINANCIAL REPORTING (CHAP 28)

16. Interim financial reports shall be published

- Whenever the entity wishes
17. If an entity does not prepare interim financial reports
- The year-end financial statements’ compliance with IFRS is not affected
18. Interim financial reports shall include as a minimum
- A condensed set of financial statements and selected notes
19. An interim financial report shall include as a minimum all of the following components,
except
- Accounting policies and explanatory notes
20. Which basic financial statements are prepared as a minimum for interim financial
reporting?
- Statement of financial position, statement of comprehensive income, statement of
cash flows and statement of changes in equity
21. There is a presumption that anyone reading interim financial reports shall
- Have access to the most recent annual report
22. Which statement in relation to an interim financial report is true?
- An interim financial report may consist of a condensed set or complete set of
financial statements
23. Publicly traded entities are encouraged to provide interim financial reports
- At least at the end of the half-year and within 60 days of the end of the interim period
24. Which statement is true regarding interim reporting?
- Interim reports are not required
25. When the business is highly seasonal, what does the standard suggest?
- Disclosure of financial information for the latest and comparative 12-month period in
addition to the interim report
26. Interim financial statements are usually presented on a
- Quarterly basis

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27. For interim reporting, an inventory loss from a market decline in the second quarter shall
be recognized
- In the second quarter
28. For external reporting, it is appropriate to use estimated gross profit rate to determine the
cost of goods sold for
- Interim reporting
29. For interim financial reporting, an expropriation gain occurring in the second quarter shall
be
- Recognized in the second quarter
30. Advertising costs incurred shall be deferred to provide an appropriate expense in each
period for
- Year-end reporting
31. Due to a decline in market price in the second quarter, an entity incurred an inventory loss.
The market price is expected to return to previous level by the end of the year. At the end of
the year, the decline had not reversed. When should the loss be reported in the interim income
statement?
- In the second quarter
32. How is income tax expense for the third quarter interim period computed?
- The estimated tax for the first three quarters based on an annual rate less than a
similar estimate for the first two quarters
33. Conceptually, interim financial statements can be described as emphasizing
- Timeliness over reliability
34. Which statement about interim reporting is true?
- The same accounting principles used for the annual report should be employed for
interim report.
35. Entities should disclose all of the following in interim financial report, except
- Events after the end of reporting period

REPORRTING IN HYPERINFLATIONARY ECONOMY (CHAP. 29)

36. Hyperinflation is indicated by all of the following, except

- All of these indicate hyperinflation
o The general population prefers to keep wealth in nonmonetary assets
o Interest rates, wages and prices are linked to a price index
o The cumulative inflation rate over three years is approaching or exceeds
100%
37. All would indicate that hyperinflation exists, except

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- Inflation rates have exceeded interest rates in three successive years

38. In a hyperinflationary economy, monetary items
- Are not restated because they are already expressed in terms of the measuring unit
current at year-end
39. Which would indicate that hyperinflation exists?
- People prefer to keep their wealth in nonmonetary assets or a stable foreign currency
40. An entity that wishes to present information about the effect of changing prices in a
hyperinflationary economy should report this information in
- The body of the financial statements
41. For purposes of adjusting financial statements for changes in the general price level,
monetary items consist of
- Assets and liabilities, whose amounts are fixed by contract in terms of pesos
42. All of the following are monetary items, except
- Administration costs paid in cash
43. The financial statements of an entity that reports in the currency of a hyperinflationary
economy shall be stated in terms of
- Measuring unit current at the end of reporting period
44. The gain or loss on purchasing power in a hyperinflationary economy shall be included in
- Profit or loss and separately disclosed
45. In a hyperinflationary economy, amounts not expressed in the measuring unit current at
the end of reporting period are restated by applying the
- General price index
46. When computing information on a constant peso basis, which of the following is
classified as nonmonetary?
- Accumulated depreciation – equipment
47. When computing information on a constant peso basis, which of the following is
classified as nonmonetary?
- Estimated warranty liability
48. When computing information on a constant peso basis, which of the following is
classified as nonmonetary?
- Inventory
49. When computing information on a constant peso basis, which of the following is
classified as monetary?
- Allowance for doubtful accounts

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50. Purchasing power gain or loss results from

- Monetary asset and monetary liability
51. During a period of inflation, an account balance remains constant. With respect to this
account, a purchasing power loss will be recognized if the account is a
- Monetary asset
52. During a period of deflation, an entity would have the greatest gain in general purchasing
power by holding
- Cash
53. During a period of deflation, in which a liability account balance remains constant, which
of the following occurs?
- A purchasing power loss if the item is a monetary liability
54. During a period of inflation in which a liability account balance remains constant, which
of the following occurs?
- A purchasing power gain if the item is a monetary liability
55. During a period of inflation, an account balance remains constant. With respect to this
account, a purchasing power gain is recognized if the account is a
- Monetary liability

FIRST TIME ADOPTION PFRS (CHAP 30)

56. This defined as the first annual financial statements in which an entity adopts PFRS by an
explicit and unreserved statement of compliance with PFRS
- First PFRS financial statements
57. An entity that presents first annual financial statements that conform with PFRS is known
as
- A first time adopter
58. What is the date of transition to PFRS?
- The beginning of the earliest period for which an entity presents full comparative
information under PFRS
59. An entity is a first time adopter of PFRS. The most recent financial statements it presented
under previous GAAP were on December 31, 2020. The entity adopted PFRS for the first
time and intended to present the first PFRS financial statements on December 31, 2021. The
entity plans to present a two-year comparative information for years 2020 and 2019. The
opening PFRS statement of financial position should be prepared on
- January 1, 2019
60. The statement of financial position at the date of transition to PFRS is best described as
- Opening PFRS statement of financial position

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61. Under which of the following circumstances would an entity’s current year financial
statements not qualify as first PFRS financial statements?
- The entity prepared its financial statements in the previous year in conformity with all
requirements of PFRS and contained an explicit and unreserved statement of
compliance with PFRS
62. Under what condition would an entity’s current year financial statements qualify as first
PFRS financial statements?
- All of these conditions would qualify the current year financial statements of an entity
as first PFRS financial statements
o When an entity prepared its most recent previous financial statements
containing an explicit and unreserved statement of compliance with some but
not all PFRS
o When an entity prepared financial statements in the previous period under
PFRS for consolidation purposes without preparing a complete set of
financial statements
o When an entity did not present financial statements in the previous period

63. Which is not a required adjustment in an opening PFRS statement of financial position?
- Disclose as comparative information all figures under previous GAAP alongside
figures for the current year presented under PFRS

64. How should a first time adopter of PFRS recognize the adjustments required to present the
opening PFRS statement of financial position?
- All of the adjustments should be recognized directly in retained earnings or, if
appropriate, in another category of equity
65. Which of the following would be included in the first PFRS financial statements?
- All of these statements would be included in the first PFRS financial statements
o Three statements of financial position at the end of current year, at the end of
the prior year and at the date of transition to PFRS
o Two statements of comprehensive income for the current year and prior year
o Two statements of changes in equity and two statements of cash flows for the
current year and prior year

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